Senate Committee on the Budget listens to testimony by Treasury Secretary Henry Paulson on the FY2009 Budget

The Senate Budget Committee listened to testimony today by Treasury Secretary Henry Paulson on “The President’s FY2009 Budget and Revenue Proposals.” Committee Chairman Kent Conrad (D-ND) said that administration’s tax cuts are contributing to the growing U.S. debt which will rise an additional $700 million this year. He said that a “wall of debt of stunning proportion” is being built and that the U.S. is having to rely heavily on contributions and investments from other countries.

Ranking Member of the committee Judd Gregg (R-NH) offered a contrasting view to the issue of debt. He faulted Democrats for making no effort to offer a solution and pointed to figures showing that the wealthy are paying more taxes and that the poor are receiving more returns today than they were under the Clinton Administration. He said that the economy would “hit a brick wall” if taxes were raised and defended the administration’s tax cuts claiming that they are needed to encourage entrepreneurship.

Treasury Secretary Paulson reiterated the need to impose the administration’s tax cuts repeatedly saying that taxes eliminate funds and incentive for an economy to grow. In response, Senator Conrad held up a chart disputing the relationship between tax burden and economic growth. Paulson answered the committee members’ questions vaguely and gave no specifics regarding how to alleviate the debt or help move the economy.